MOST savings accounts in the UK now pay less than the rise in the cost of living. Savings rates are so poor that £15,000 in the wrong bank account will earn a measly 83 pence a year in interest – while inflation is running at 0.6 per cent.

TV’s top money expert and founder of MoneySavingExpert.com Martin Lewis says it is time to become a “savings tart”.

WHAT’S the first thing I should do to get better returns?
If you have debts, especially on credit cards, use your savings to pay them off because those debts are invariably costing you more than the savings will pay you in interest.

The average Brit with savings has £5,000. With five grand in the bank how can I get the best rate but still be able to get my hands on my money at any time?

Bank current accounts have been the way to earn high interest in recent years. But three major accounts that were the last bastion for savers to earn decent interest are cutting their rates. Every bank I mention is protected by the state up to £75,

Martin Lewis explains exactly why he stormed off GMB today 000.

Club Lloyds pays four per cent on between £4,000 and £5,000 but from January will pay two per cent.
Also from January TSB, who paid five per cent on up to £2,000, will pay three per cent on up to £1,500.
The Halifax Reward bank account currently pays £5 a month to anybody who pays in £750 a month and stays in credit but from February that will drop to £3 a month.

And on Tuesday, the big one — Santander 123 — drops its interest rates from three per cent to one-and-a-half per cent on up to £20,000.

Is there anywhere I can still earn five per cent?
The first year you put money into a Nationwide bank account you can earn five per cent on up to £2,500.
And right now if you open a bank account with the Co-op it will pay you £150. By joining its Everyday Reward Scheme you get up to £5.50 a month on top. The way I suggest people earn decent returns now is to have multiple bank accounts paying high interest on small amounts. We call them bank savings tarts.

Some of these savings tarts have six or seven accounts and siphon money between them, using standing orders to meet the minimum pay-in amount on each account to earn interest, see diagram below.

If you are willing to be a bank savings tart you can get five per cent on up to £2,500 in Nationwide and you will earn three per cent on up to £5,000 in Bank of Scotland. On that basis you can earn an average of roughly four per cent on savings of £7,500 compared to the best easy-access savings account paying just one per cent.

Here’s another option: First Direct, HSBC and M&S will give you at least £100 to join them.
These are all free accounts. You pay nothing as long as you fulfil their criteria. So they pay you for joining them and then they have linked regular savings which pay five per cent usually on up to £300 a month paid in.

Interestingly, the Nationwide account that pays five per cent also allows you to save up to £500 a month in a regular saver at five per cent, too. You can shelter more that way.

I have £20,000 saved. Where can I keep it in one place and get the best deal?
Even though Santander 123 is cutting its rates, if you have £20,000 in one account there’s still nowhere that will beat it. It gives one-and-a-half per cent while the best easy-access account pays one per cent.

You’ll pay a £5 monthly fee but you get cash back by paying your bills from your account. Some people will earn a lot more in cash back than the £5 monthly fee. Exactly how to save depends on your circumstances. Find out more at mse.me/topsavings.

Should I still keep money in a tax-free cash ISA?
Last April the new Personal Savings Allowance was launched.

That meant ALL savings interest earned up to £1,000 for basic rate taxpayers – £500 for those on higher rate – is tax-free. At current rates of one per cent, you’d need to save £100,000 as a basic rate taxpayer before you paid tax.

This means for many people there is no benefit to them having money in a cash ISA because their interest is tax-free anyway. The best easy-access cash ISA is with Coventry Building Society which pays 1.1 per cent, which beats the top normal savings account at one per cent.

What if I am saving for my first house?
There’s an absolute no-brainer account for anyone who has not yet bought or owned a house.

That is the Help To Buy ISA. You can put £1,200 in month one and then £200 a month after that and the top interest rate is 2.27 per cent with Barclays. If you then use it as a deposit for a mortgage — not for the house — the Government adds 25 per cent to what you’ve saved, up to a maximum of £3,000. There is nothing in the world that will beat that.

Martin Lewis explains exactly why he stormed off GMB today

What about Premium Bonds?
For most people the fact Premium Bonds prizes are tax-free is no longer an advantage because most people pay no tax on their savings. Premium Bonds are really best for higher rate taxpayers who have enough savings to pay tax on interest. There is a tiny chance of winning a lot of money.

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Are there any other schemes where I can get five per cent?
There is a thing known as peer-to-peer saving. This works through companies such as Zopa and RateSetter.

What they do is they take your money, split it and lend it out. Rates are around five per cent. There is no lower limit and you can put a lot of money in.

It is a relatively easy way of saving — but unlike normal accounts you don’t get the “up to £75,000 per person” savings safety guarantee so it’s a totally different risk. Don’t do it without doing detailed reading.